Anta's Market Value Evaporated 10 Billion 900 Million, Responded By Saying That Distributors Were Completely Independent.

In July 7th, Anta Sports Products Limited (hereinafter referred to as "Anta sports", 2020.HK) was shorted by the Muddy Waters Research (short selling company). The intraday share price fell nearly 9%. At noon, Anta sports announcement, the company stock briefly suspended at the HKEx.

At 13:00 p.m. on July 8th, Anta announced a temporary suspension. Anta sports newspaper HK $51.25 per share, down 7.32% from the previous trading day, and the market value evaporated 10 billion 900 million.

Muddy water company said in its short report that Anta sports secretly controlled 27 dealers, of which at least 25 were first-class dealers. These secret controlled dealers account for 70% or even 80% of Anta brand sales. The company's senior management's control over such dealers is an open secret. The agency believes that the company controls the financial figures through controlling dealers.

It is a lie for Anta to claim that a distributor at the company level is an independent third party. Anta sports executives often call their distributors "subsidiaries".

On the morning of July 9th, Anta sports firmly denied the accusation and considered it to be inaccurate and misleading. In view of the allegation, Anta pointed out that the majority shareholder has not held down the stock in the past five years, and the major shareholder has not yet ever held a stock.

Anta sports announcements in the announcement are as follows:

The independence of our group distributors

1. On the date of this announcement, the board of directors knows and is convinced that all the 25 distributors of the group mentioned in the muddy water report are independent of the company or any of its stakeholders (with the Listing Rules) and have nothing to do with the other third parties.

2, the group's distributors have their own management team, make independent business decisions, and have independent financial and human resource management functions of the group, and there is no mutual control relationship.

3, the group has standardized its relationship with distributors through distribution agreements and related guidelines (the terms are roughly the same for all distributors), and there has been no significant change in recent years. The group adopts a unified wholesale discount policy for all distributors in China and provides rebates according to the industry's customary retail management performance assessment. There is no management fee sharing between the group and its distributors.

4, since most of the distributors of the group are distributors in the region who sell only the products of the group, they sell their products in the designated areas specified in their respective distribution agreements. Therefore, the group will provide more guidance and regular communication with them in the aspects of sales and marketing strategy, market management and performance appraisal system, so as to ensure that the products of the group in the region are successful. Despite these guidelines and discussions, distributors are responsible for making final business decisions and self financing.

Other clarifications concerning the distributors of the group

5, as the group distributors only sell the products of the group, the group advocates and distributors wholeheartedly accept and share the group's core values and corporate culture, and regard them as a part of the Anta brand. The group was informed that sometimes some distributors would call themselves "subsidiaries" or "subsidiaries" of the group in order to facilitate their business, rather than by definition of law.

The claim is not intended to establish or determine a legal relationship, but rather to show that they are part of the Anta brand. The group also regularly organizes corporate culture and strategy seminars for distributors and senior management of the group to ensure that our group's strategy is consistent and effective communication from the brand level to the retail terminals managed by distributors and franchisees.

6, in order to support distributors, the group allows the sub distributors to use the brand name "Anta", Anta brand logo and other administrative tools (such as e-mail domain name and communication address).

7. In view of the close working relationship between the group and its distributors, there are individual employees who leave the group and join distributors or vice versa. These are the individual career plans and decisions of the relevant employees, and are not uncommon in the industry.

As of press release, Anta sports shares fell 2.44% to HK $50 today, with a market value of HK $135 billion 62 million.